You can also use your EIN for your business bank account, which you use exclusively for depositing daycare income and paying daycare expenses. Instead of your Social Security Number, use your EIN on business tax filings like Form W-10, Dependent Care Provider’s Identification, and Certification.
To do so, most tax professionals recommend you include reimbursements in your gross business income, then claim a deduction.Įven if you operate your daycare business as a sole proprietor or have no employees, obtaining an Employee Identification Number (EIN) is still a good idea. Furthermore, grants made directly to your business are generally included in business income - if you spend the grant money in your daycare business, you can deduct those expenditures. Additionally, if your net income (minus expenses) is $400 or more, you may also need to file Schedule SE (Form 1040) and pay self-employment taxes.Īll of the examples of income types cited above are included in your daycare gross income. To discover more about the tax implications related to income and expenses of operating as a daycare provider, continue reading below.īecause you are providing daycare services intending to make a profit, the IRS considers any money you make to be self-employment income, which most daycare providers must report along with their expenses on Schedule C (Form 1040).
Fortunately, it’s not as scary as it sounds. Your income and expenses factor into your obligations at tax time, and filing or record-keeping mistakes can cause headaches down the line. However, if you are, or are considering becoming, a professional daycare provider, it’s essential that you understand the tax considerations of such an operation. That’s a lot of childcare…which means that for private providers licensed and certified to offer daycare services for compensation, there is plenty of potentially lucrative work. From that group, 62% went to a daycare center, preschool, or prekindergarten center-based care.Īs you read this, 7.3% of all children in the United States were in care during the past fifteen to thirty-four hours. 59% is approximately how many children that are five or younger who are not enrolled in kindergarten that were in non-parental childcare once a week in 2019.
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